Wednesday, January 9, 2019

News: Property developers banned after abusing £12m of investments

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Six directors have been banned for a total of 54 years after they misled more than 300 people to invest £12m into residential property developments. A tangled web of companies links to one proposed scheme in Rotherham where work remains incomplete.

Last year Rothbiz reported that quick progress on converting the historic Howard Building in Rotherham town centre was unlikely after a court injunction was granted that prevents its sale.

Companies and their directors were served with a freezing injunction with liquidator, Louise Brittain, alleging that money from investors has been wrongfully diverted to a number of companies.

The assets were frozen as the liquidator of Absolute Living Developments hunts to recover money for investors and creditors left out of pocket when schemes failed to be completed, or in some cases, even started.

Now the Insolvency Service has concluded an investigation into Absolute Living Developments Limited which sold apartments in England off-plan to investors who were largely based in Asia.

Incorporated in November 2013, with registered offices in Liverpool, the courts heard that the company sought out investments to convert commercial buildings into residential properties.

The developments were located in the North of England, predominately Bradford and Greater Manchester. However, people complained that having invested through Absolute Living Developments, the developments had not been fully completed and the apartments were unliveable.

Absolute Living Developments was wound-up by order of the courts in April 2016 with the liquidator's actions still ongoing - to date they have received claims from creditors in excess of £68m.

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Investigators discovered various examples of misconduct by Absolute Living Developments facilitated by the directors. The company provided misleading and incomplete information about the developments to investors, meaning people couldn’t carry out due diligence.

Absolute Living Developments had no ability to ensure the terms of contracts with investors could be met and failed to provide adequate safeguards for money obtained from investors. For one of the developments, Absolute Living Developments requested completion payments from investors despite the development not being completed.

And the company signed charges over Absolute Living Developments’ assets, which meant that a third party owns them and there are no remaining assets in the liquidation to pay creditors.

In Rotherham, with little evidence of the conversion into twelve, one bed apartments and 60 studio apartments at "Howard Residencies", applicants, AVRO Developments headed into insolvency, with Rotherham Council leading the petition in 2015 to have the company wound up.

Financial documents link AVRO Developments to DS7 Limited which has acted as a lender to Absolute Living Developments.

Now suffering from vandalism and damaged even before a fire in 2017, the prominent four storey building opened in the 1930's and was previously part of the college and also housed the council's environmental health teams and a day nursery before being sold in 2014.

Ken Beasley, official receiver for the Insolvency Service, said: "This was a complex investigation, considering the amount of money that was invested, not all of the directors were based in the UK and we worked with several other authorities.

"We want to draw attention to these rogue directors so we can alert people about the risks involved when investing, while also warning that we will investigate and tackle those that set out to deliberately rip people off by misrepresenting the investment opportunity on offer."

Last year, private prosecution was brought against other directors who were convicted of making false representations in an Individual Voluntary Arrangement (IVA) proposal.

Images: Google Maps

1 comments:

M Benson,  January 9, 2019 at 5:17 PM  

The Howard Street scenario does make you wonder about the due diligence done on AVRO and the associated companies. Us sceptics would always look at the background cos. as well as the prime project co., also search on the Directors of all the cos. and finally see what was out there by way of 'blogs' about ethics and performance. It seems that a development opportunity has been wasted and with the resulting vandalism the building will be much harder to bring back into [any] use. Hopefully a good price was achieved in 2014 - as that would be the only saving grace.

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